The causes and impacts of loan default to microfinance institutions (MFIS) activities: A case of pride Tanzania Ltd Pamba branch-Mwanza
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Date
2015
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Publisher
Mzumbe university
Abstract
This study was conducted in order to find out the impacts and causes of loan default to MFIs activities using PRIDE Tanzania ltd- Pamba branch in Mwanza as a case study. This study specifically focused on finding out the impacts of loan default on MFIs operational costs, income, profit and lending, examining extent in which loan supervision, monitoring and control affects loan repayment, identifying whether multiple borrowing by clients leads to loan default, finding out whether the use of funds by clients for unintended purpose contribute to loan default. Research design used was case study design. The study carried out in Mwanza region in Nyamagana and Ilemela district sample size comprised of 100 clients who benefit from PRIDE Tanzania ltd services and 10 loan officers of PRIDE Tanzania ltd .Sampling techniques adopted was Simple random sampling technique used for loan officers and Purposive sampling technique used in sampling MFIs clients .Data was processed through Statistical Package for Social Scientist and analysed and presented in the form of frequencies, percentages and tables. The study findings revealed that interest rates charged on loans, diverting funds from its intended use, multiple borrowing has a direct impact on repayment. The research also revealed some of the causes that contributed to the default by some customers such as lack of collateral and high interest rates. The study also concluded that formation of strong solidarity groups is key to preventing high arrears. MFIs should also provide appropriate training and supervision to clients regarding the use of their loans. Further more MFIs should have clear and effective credit or lending policies and procedures and must be regularly reviewed.
Description
A dissertation submitted to Mzumbe University as a partial fulfillment of the requirements for the award of the degree of Masters of Business Administration in Corporate Management (MBA-CM) of Mzumbe University
Keywords
Loan supervision, Loan default., Micro Finance Institutions(MFIs)
Citation
APA